ITC Q1 FY27: cigarette tax hike squeezes profit, consolidated PAT ₹4,509 Cr down 16% YoY

ITC's Q1 FY27 (quarter ended 30 June 2026) is a profit-decline quarter dressed up by an inflated topline. Consolidated PAT came in at ₹4,508.79 Cr, down 15.6% YoY (from ₹5,343.41 Cr) and 17.6% QoQ (from ₹5,469.74 Cr) — and that figure is flattered by a ₹405.88 Cr one-off exceptional gain (the Ind AS 103 fair-value remeasurement of Sproutlife Foods, which became a subsidiary on 1 April 2026). Stripping the one-off, adjusted consolidated PAT is ~₹4,103 Cr, roughly 23% below last year. The standalone print, which carries no exceptional item, tells the cleaner story: PAT ₹3,578.82 Cr, down 27.1% YoY. That >10-point divergence matters — readers will see both numbers; consolidated is buffered by the one-off gain plus associates/hotels/IT-services, while standalone lays bare the ~27% core hit.

The driver is the cigarette tax overhaul. Following the expiry of GST Compensation Cess, the Government raised GST and central excise duty on cigarettes from 1 February 2026, and this was the first full quarter under the new regime. Consolidated excise duty ballooned to ₹10,408.93 Cr from ₹1,634.56 Cr a year ago; because excise (unlike GST) is not netted out of gross revenue, reported consolidated revenue from operations of ₹29,523.30 Cr is optically up 27.6% YoY — but that is a pass-through artifact, not underlying growth, and ITC itself states the figures are 'not strictly comparable.' The real damage shows in the FMCG-Cigarettes segment result, down ~31% YoY to ₹3,769.11 Cr despite price hikes of up to 17%, as the tax load outpaced pricing. Net margin on the (inflated) topline collapsed to ~15.3% from ~22.4%.

The stock went into the print at ₹281, down 3.1% over the past month of trading.

For context: revenue is at a 6-quarter high.

Margins compressed hard — net margin ~15.3% vs ~22.4% year-ago; consolidated EPS (basic) ₹3.51 vs ₹4.19

Against the Street, this is a miss: brokerage previews (Business Standard poll) had flagged a 10-13% revenue/PAT decline, with standalone PAT seen around ₹4,026 Cr (~18% lower); the actual standalone print fell a steeper 27% as the cigarette segment absorbed more of the tax than modelled. ITC gives no formal quantitative guidance, so there is no company outlook to score against, and no management press-release commentary was extracted with this filing. Corporate developments in the quarter tie directly to the numbers: Sproutlife's consolidation (the source of the exceptional gain and now inside FMCG-Others) and the raised 49.32% stake in associate Mother Sparsh; the 115th AGM and Hemant Bhargava's re-appointment are governance items, not earnings drivers. FMCG-Others held up — segment EBITDA ₹631.06 Cr vs ₹544.65 Cr — and Paperboards/Agri were steady, but neither is large enough to offset the cigarette drag.